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Tuesday, 25 February 2014

Business the key to jobs and growth

When it comes to doing business, there are few places worse, it seems, than the likes of Myanmar, also known as Burma.

That’s at least, according to the World Bank, which has Myanmar ranked as the worst in Asia – at 182nd of 189 rated economies – on the ease of doing business. That’s even worse than 137th-ranked Cambodia.

Rounding out the “Top 5” for worst in Asia in The World Bank 2014 Doing Business report – the latest annual assessment of the ease of doing business in economies around the world – are Timor-Leste (179th), Afghanistan (164th), Laos (159th) and the Federated States of Micronesia (156th).But Cambodia should not take heart in being “better” than the likes of Myanmar or Timor-Leste. Nor should the nation see investment from a relatively more risk-tolerant China as an alternative to taking actions to improve the enabling environment for business.

Indeed, a much troubled water supply project in Nepal supported by the Asian Development Bank (ADB) – and the recent replacement of the Chinese contractor on it – underscores yet again the challenges that development partners have in getting things done in numerous countries where the ease of doing business has much to be desired. (Nepal ranks 105th on the list.)

As information is updated and Myanmar moves to draft, pass and then enforce new legislation as part of efforts to strengthen the rule of law, that nation’s ease-of-business ranking will surely improve, and may one day move past Cambodia to attain a title that sadly the Kingdom has yet to earn – and that is being heralded as the latest Southeast Asian tiger economy.

Already, major western multinationals are rushing in to Yangon and Mandalay, joining the ranks of Chinese, Thai and other Asian businesses and entrepreneurs who have long been active in Myanmar despite western sanctions.

Clearly, investing in Myanmar or any of the places low on the World Bank’s ease of doing business list is not for the faint hearted.

But whether Myanmar or any of the Top 5 ranked economies for ease of doing business – Singapore, Hong Kong, New Zealand, the United States and Denmark – there are lessons for Cambodia to be taken from each on how best to grow economies, create jobs and reduce poverty.

For nearly four years, I served as US Ambassador to and board member of the Asian Development Bank and had the opportunity to travel to Cambodia on more than one occasion.

During my time in the post, several points became very clear, particularly as I saw many a troubled project or others that never got off the ground.

That included: while development banks and aid agencies can provide incremental good, it is good governance and a strong rule of law that are critical to businesses and essential to job creation and long-term growth.

More than ever, given dwindling government budgets and reduced foreign assistance dollars, the private sector – whether brave entrepreneurs, small- and medium-sized enterprises or well-established and deep-pocketed corporations – can play a critical role in fighting poverty.

Business investments that can make money and simultaneously empower communities at the grassroots level are also a key to economic growth and the reduction of poverty-related violence.

The private sector must be a critical partner if we are to sustainably lift people out of poverty. Indeed, whether in Asia or the United States, it will be small businesses and entrepreneurs – regardless of nationality – who will drive long-term change and job creation.

It is not sustainable to have most employment funded by aid money and government largesse.

With well-thought-through partnerships, public-private efforts can be done in a way that is good for business and more sustainable than aid packages subject to donor fatigue and annual budget cuts.

Yet, too often, inept bureaucracy, poor or poorly enforced regulation, interventions by government and endemic corruption get in the way.

These challenges of the “little bric” may well be a longer-term constraint to growth and one of the biggest impediments to building better lives for people everywhere, including in Cambodia and others of the world’s smallest or land-locked states.

Curtis S Chin served as US ambassador to the Asian Development Bank under presidents Barack Obama and George W Bush (2007-2010). He is a managing director with advisory firm RiverPeak Group, LLC.